TaxTMI 
TaxTMI 
TaxTMI 
2017 (4) TMI 445
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....under section 143(3) of the Act vide order dated 20.12.2011 wherein the income of the assessee was determined at Rs. 34,14,200/-. Notice under section 274 r.w.s. 271 of the Act was issued simultaneously on 31.12.2011 for initiating penalty proceedings under section 271(1)(c) of the Act. The AO vide order dated 27.09.2013 levied penalty of Rs. 9,29,562/- on four additions/disallowances aggregating to Rs. 25,31,284/- which are listed hereunder: - (i) Income from House Property on Mehar-Dad Property Rs. 10,29,364/- (ii) Difference on Income from House Property of Hari Niwas property Rs. 5,68,761/- (iii) Expenses disallowed - claimed against interest income Rs. 6,28,866/- (iv) Society and maintenance charges disallowed Rs. 3,04,293/- 2.2 On appeal, the learned CIT(A) vide the impugned order dated 15.07.2014 deleted the penalty levied under section 271(1)(c) of the Act in respect of the issues listed at (i) and (ii) in para 2.1 (supra) and upheld the levy of penalty on issues listed at S.Nos. (iii) and (iv) of para 2.1 (supra). 3.1 Aggrieved by the order of the CIT(A)-25, Mumbai dated 15.07.2014 for A.Y. 2006-07, the assessee has preferred this appeal raising the following....
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....d go to the very root of the matter and accordingly admit the same for consideration and adjudication in this appeal following the ratio of the decision of the Hon'ble Apex Court in the case of NTPC Ltd. vs. CIT (supra). 4. Additional grounds of appeal 1 & 2 - Validity of penalty proceedings initiated under section 271(1)(c) vide notice dated 30.12.2011 and consequent penalty order dated 27.09.2013 4.1.1 At the outset, the Bench heard both parties on the additional grounds raised. In these grounds, the assessee contends that the penalty proceedings initiated under section 271(1)(c) of the Act are invalid and bad in law as the show cause notice issued under section 274 r.w.s. 271 of the Act on 30.12.2011 for A.Y. 2006-07 is ambivalent; in so far as it does not mention or indicate as to whether the initiation of penalty is for concealing of income or for furnishing of inaccurate particulars of income and consequently the penalty order dated 27.09.2013 levying penalty under section 271(1)(c) of the Act is invalid and bad in law. 4.1.2 In this regard the learned A.R. of the assessee drew the attention of the Bench to the notice issued by the Assessing Officer, i.e. the ITO Ward ....
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....in the facts and circumstances of the case, as laid out above. In our considered view, proceedings for levy of penalty under section 271(1)(c) of the Act can be initiated only if the AO is satisfied that any person has 'concealed particulars of income' or has 'furnished inaccurate particulars of income'; only then can he hold that such person shall pay by way of penalty the sum mentioned in section 271(1)(c)(iii) of the Act. 4.3.2 We find that the Coordinate Bench of this Tribunal in the case of Precision Containeurs Ltd. vs. ACIT in ITA Nos. 3448 & 3449/Mum/2011 dated 04.01.2017 has in similar circumstances, where the notice under section 274 r.w.s. 271 of the Act did not mention as to whether the initiation of penalty proceedings was for concealment of income or for furnishing of inaccurate particulars of income, considered the issue and after taking into consideration the ratio of the decisions of the Hon'ble Apex Court in Dilip N. Shroff (2007) 291 ITR 519 (SC), Dharmendra Textile Processers & Others (2008) 306 ITR 277 and DCIT vs. Reliance Petroproducts Pvt. Ltd. (2010) 322 ITR 158 (SC) and of the Hon'ble Karnataka High Court in Manjunatha Cotton & Ginning Factory (20....
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....had merely held that the assessee is guilty of furnishing of inaccurate particulars and not of concealment of income;" On a perusal of the notices issued under section 274 r.w.s. 271 of the Act for initiation of penalty proceedings under section 271(1)(c) of the Act for both assessment years 1996-97 and 1997-98 in the case on hand, we find that in the standard proforma (ITNS-29) used by the AO for issuing the said notices, the AO himself is not certain as to whether he has to proceed on the basis that the assessee has concealed his income or had furnished inaccurate particulars of his income. 5.2.3 The Hon'ble Apex Court in the case of CIT vs. Reliance Petroproducts P. Ltd. (2010) 322 ITR 158 (SC), while referring to its decisions in the case of Dilip N. Shroff vs. JCIT (2007) 291 ITR 519 and UOI vs. Dharmendra Textile Processors (2008) 306 ITR 277, in para 9 of its order has observed and clarified that the basic reason why the decision in Dilip N. Shroff (supra) was overruled by Dharmendra Textile Procesors (supra) was only to the effect that mens rea was not to be considered an essential ingredient for levy of penalty under section 271(1)(c) of the Act. No fault, howeve....
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.... particulars while filing return, there was no necessity of mens rea. The court went on to hold that the objective behind the enactment of section 271(1)(c) read with Explanations indicated with the said section was for providing remedy for loss of revenue and such a penalty was a civil liability and, therefore, wilful concealment is not an essential ingredient for attracting civil liability as was the case in the matter of prosecution under section 276C of the Act. The basic reason why decision in Dilip N. Shroff Vs. Joint CIT was overruled by this court in Union of India Vs. Dharamendra Textile Processors, was that according to this court the effect and difference between section 271(1)(c) and section 276C of the Act was lost sight of in the case of Dilip N. Shroff Vs. Joint CIT However, it must be pointed out that in Union of India Vs. Dharamendra Textile Processors, no fault was found with the reasoning in the decision in Dilip N. Shroff Vs. Joint CIT, where the court explained the meaning of the terms "conceal" and "inaccurate". It was only the ultimate inference in Dilip N. Shroff Vs. Joint CIT to the effect that mens rea was an essential ingredient for the penalty under sect....